If you earn a salary, the standard deduction on salary is the simplest tax saving you will ever claim. You do not invest anything, file any proof, or submit any bill. Your employer subtracts a fixed amount from your salary before working out your tax, and that amount is ₹75,000 in the new tax regime and ₹50,000 in the old tax regime for FY 2026-27.
Quick answer: The standard deduction on salary is ₹75,000 under the new tax regime and ₹50,000 under the old tax regime, or your salary itself if that is lower. It applies once per person per year, needs no bills or proof, and covers salaried employees and pensioners drawing pension from a former employer. Combined with the ₹12 lakh rebate, it makes salary up to ₹12.75 lakh tax-free in the new regime.
What is the standard deduction for salaried employees?
The standard deduction is a flat amount taken off your salary income before tax is calculated. It sits under the head “Salaries” in the Income-tax Act. For salary earned up to 31 March 2026, it was Section 16(ia) of the Income-tax Act, 1961. For salary earned from 1 April 2026, the Income-tax Act, 2025 applies, and the same deduction now sits in Section 19 of the new Act. The amounts did not change with the new Act.
Think of it as a fixed allowance for the everyday costs of earning a salary — travel, work clothes, phone bills — without the tax department asking you to prove any of it. That is the whole point: no receipts, no declarations, no investment. It is applied automatically by your employer while calculating monthly TDS, and it is also reflected when you file your return.
The salary calculation runs in this order: gross salary, minus exemptions such as HRA, minus the standard deduction, minus professional tax (old regime only). What is left is your salary income, which then goes into your total income.
How much standard deduction can I claim in 2026?
The amount depends on the regime you choose:
| Case | New regime | Old regime |
|---|---|---|
| Salaried employee / pensioner (pension from former employer) | ₹75,000 | ₹50,000 |
| Family pension (paid to a family member after the employee’s death) | One-third of pension, capped at ₹25,000 | One-third of pension, capped at ₹15,000 |
Two points in that table catch people out. First, ₹75,000 is new-regime only — the old regime still stops at ₹50,000, even though some blogs wrongly show ₹75,000 for both. Second, the family pension figure is a separate deduction, not the standard deduction itself. It is smaller, and it is worked out as one-third of the family pension subject to the cap.
The ₹75,000 figure came from the Finance (No. 2) Act, 2024, which raised the new-regime amount from ₹50,000. Budget 2025 raised the new-regime family pension cap from ₹15,000 to ₹25,000. Budget 2026 changed neither the slabs nor the standard deduction, so the same figures apply to salary earned from 1 April 2026.
Who can claim the standard deduction on salary?
Anyone whose income is taxed under the head “Salaries” can claim it. That covers private-sector employees, government employees, PSU staff, and part-time or contract staff who are on a payroll. It does not depend on how much you earn — a salary of ₹5 lakh and a salary of ₹50 lakh both get the same flat amount.
Pensioners also get it, provided the pension comes from a former employer and is taxed as salary. This is the part many retirees miss: pension is not a separate head of income for this purpose. If your pension is taxed under “Salaries”, the standard deduction applies to it just as it did to your salary.
Who cannot claim it? Freelancers, consultants, and business owners cannot, because their income is not salary. If your only income is interest, rent, or capital gains, there is no standard deduction to claim. The deduction is tied to the salary head, not to being a taxpayer in general.
How the standard deduction makes ₹12.75 lakh salary tax-free
This is the most quoted salary figure in Indian tax, and the standard deduction is half of the reason for it. In the new regime, the rebate under Section 156 of the 2025 Act (Section 87A of the 1961 Act) wipes out tax on total income up to ₹12 lakh. Add the ₹75,000 standard deduction on top, and a salaried person can earn ₹12,75,000 and still pay no tax:
| Step | Amount |
|---|---|
| Gross annual salary | ₹12,75,000 |
| Less: standard deduction (new regime) | ₹75,000 |
| Total income | ₹12,00,000 |
| Tax on ₹12,00,000 under new-regime slabs | ₹60,000 |
| Less: rebate (Section 156) | ₹60,000 |
| Tax payable | Nil |
Note the limit: the ₹12.75 lakh figure works only for salary or pension income. A freelancer with ₹12.75 lakh of business income gets no standard deduction, so the rebate alone covers only ₹12 lakh for them. The rebate also does not apply to tax on special-rate income such as short-term capital gains on equity shares.
Worked examples: what you actually save
Example 1 — new regime, salary ₹13,00,000. After the ₹75,000 standard deduction, salary income is ₹12,25,000. That is ₹25,000 above the rebate limit, so a small tax applies on the excess, softened by marginal relief. Without the deduction, the full ₹13,00,000 would have been taxed from a higher starting point.
Example 2 — old regime, salary ₹9,00,000. After the ₹50,000 standard deduction, salary income is ₹8,50,000, before HRA, Section 123 (old 80C) and other old-regime deductions. The deduction alone saves tax at your slab rate.
Example 3 — low salary of ₹40,000 a year. The deduction cannot exceed the salary itself, so it is ₹40,000, not ₹75,000. Salary income becomes nil.
At the top slab, the saving from the deduction itself is worth ₹23,400 a year in the new regime (₹75,000 × 30% plus 4% cess) and ₹15,600 in the old regime (₹50,000 × 30% plus 4% cess). At lower slabs the saving is smaller, but the deduction still applies in full.
Can I claim the standard deduction twice if I change jobs?
No. The standard deduction is once per person per year, not once per employer. This is the most common mistake in this area. If you change jobs mid-year, each employer may apply the full ₹75,000 (or ₹50,000) while calculating your monthly TDS, because neither employer knows what the other did. When you file your return, you can still claim only one standard deduction in total.
If you claim it twice, the extra amount is disallowed and you may get a tax demand with interest. The fix is simple: when you join a new employer, tell them about the salary and TDS from your earlier job in the same year, so their TDS calculation uses the correct total. Your Form 16 from each employer (Form 130 from FY 2026-27 under the new Act) will show the deduction each one applied — check that the combined claim in your return is only one standard deduction.
Do I need bills or proof to claim the standard deduction?
No. That is what makes it different from HRA or Section 123 deductions. You do not submit rent receipts, investment proofs, or expense bills for it. Your employer applies it automatically in the TDS calculation, and when you file your return, the salary schedule already accounts for it.
The only paperwork point is the job-change case above: keep both Form 16s (or Form 130s) so you can reconcile the two employers’ figures. Apart from that, there is nothing to collect during the year.
What changed under the Income-tax Act, 2025?
For most salaried taxpayers, nothing changed except the section number. The 1961 Act’s Section 16(ia) became Section 19 of the 2025 Act from tax year 2026-27, and the amounts stayed at ₹75,000 and ₹50,000. The new regime itself moved from Section 115BAC to Section 202, and the rebate moved from Section 87A to Section 156. If you are filing for AY 2026-27 (FY 2025-26), the old section numbers still apply; from FY 2026-27, use the new ones. Our guides on HRA exemption calculation, pension income tax, and Form 12BB (now Form 124) investment declaration use the same old-to-new mapping, and how to file ITR with Form 16 shows where the deduction appears in your return.
Common mistakes to avoid
- Claiming it twice after a job change — one deduction per person per year, even with two employers.
- Expecting ₹75,000 in the old regime — the old regime amount is ₹50,000.
- Claiming it on business or freelance income — only salary and employer pension qualify.
- Treating the family pension cap as the standard deduction — family pension gets one-third up to ₹25,000 (new) or ₹15,000 (old), a separate rule.
- Assuming it needs proof — it needs none, so do not skip it while gathering documents for other deductions.
Frequently asked questions
What is standard deduction for salaried employees?
It is a fixed amount subtracted from your salary before tax is calculated — ₹75,000 in the new regime and ₹50,000 in the old regime for FY 2026-27. It needs no bills or investment, and it applies to every salaried employee and to pensioners whose pension is taxed as salary.
How much standard deduction can I claim in 2026?
₹75,000 if you are taxed under the new regime, or ₹50,000 under the old regime. In both cases the deduction cannot exceed your salary itself — on a ₹40,000 salary, the deduction is ₹40,000. Budget 2026 left both figures unchanged.
Do pensioners get the standard deduction?
Yes, if the pension comes from a former employer and is taxed under the head “Salaries”. The same ₹75,000 / ₹50,000 amounts apply. Family pension is different: it gets a deduction of one-third of the pension, capped at ₹25,000 in the new regime and ₹15,000 in the old regime.
Do I need to submit bills or proof for the standard deduction?
No. Your employer applies it automatically while calculating TDS, and it is built into your salary computation when you file your return. You only need to watch the total if you changed jobs during the year, so you do not claim it twice.
Can I claim the standard deduction twice if I have two employers?
No. It is allowed once per person per year. Each employer may apply it separately in monthly TDS, but your return must show only one standard deduction. Tell your new employer about your earlier salary and TDS so the year’s TDS is worked out correctly.
Is the standard deduction available in the new regime only?
No. It is available in both regimes, at different amounts: ₹75,000 in the new regime and ₹50,000 in the old regime. In fact, in the new regime it is one of only two deductions that survive — the other is the employer’s NPS contribution — which makes it the single most valuable relief for salaried taxpayers who choose the new regime.
Is the standard deduction available to freelancers?
No. Freelancers and business owners earn income under heads other than “Salaries”, so the standard deduction does not apply to them. They claim business expenses and presumptive-taxation rules instead, which work on a different basis.
Official sources
- Income Tax Department — incometax.gov.in (salary computation, TDS, and return filing)
- Central Board of Direct Taxes — incometaxindia.gov.in (Income-tax Act, 2025 and Finance Acts)
Reviewed by Asuthod Rathod, CA. Last updated: 5 November 2026.
Disclaimer: This article explains general tax rules for information only and is not professional tax advice. Tax laws change through Finance Acts and notifications, so verify the figures for your assessment year on the official income-tax portal or consult a qualified tax professional before filing.
Editorial byline for eircicai income tax guides — covering the Income Tax Act, 2025, section renumbering, regime comparison, and deductions. Content is reviewed by Asuthod Rathod, CA.